## COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH NO. 02 - 13 - 00142 - CV

DENAR RESTAURANTS, L LC APPELLANT
V. CAROLE KING APPELLEE

---------- FROM THE 48TH DISTRICT COURT OF TARRANT COUNTY

---------- 

### MEMORANDUM OPINION 1

---------- Appellant Denar Restaurants, LLC files this interlocutory appeal challenging the trial court ’ s denial of its motion to compel arbitration. W e affirm the trial court ’ s order.

1 See Tex. R. App. P. 47.4.2 I. Background On October 4, 2010, Denar Restaurants hired Appellee Carole King to be a wai tress at a Denny ’ s Restaurant in North Richland Hill s, Texas

. 2 King reported to the restaurant for work and training on October 11

. According to King, Michael Heaton, the general manager of the restaurant , began sexually harassing her shortly after she b egan her employment, and he falsely imprisoned and assaulted her on or about October 14

. King alleges that the leve l of harassment and assault beca me untenable, and as a result, she could no longer work at the restaurant. King claims that she last worked at the restaurant on October 19 and that she was constructively discharged on October 20

. As a result of the alleged assault, King filed suit against Denar Restaurants. 3 Denar Restaurants filed a motion to compel arbitration, claiming King was required t o arbitrate her dispute with Denar Restaurants pursuant to a

“ Mutual Agreement to Arbitrate ” (the Agreement) that Denar Restaurants claims

2 Denar Restaurants independently operated the restaurant in accordance with the terms of a franchise agreement between DFO, LLC , an affiliate of Denny ’s , Inc., as franchisor, and Denar , LLC, as franchisee.

3 King also sued Heaton, Denny’s, Inc., Denar, LLC , and Sun Holdings, LLC

. Sun Holdings, LLC provided administrative services to Denar Restaurants, including payroll processing, accounting, and record

- keeping. King obtained an interlocutory default judgme nt against Heaton on liability , and she nonsuited Denny’s, Inc

. King later amended her pleading to include claims against Guillermo Perales, an alleged alter ego of Denar Resta urants, Denar , LLC, and Sun Holdings, LLC and against EYM Diner of DFW, LLC, an entity to which Denar Restaurants, Denar , LLC , and Sun Holdings, LLC allegedly fraudulently transferred their assets after King filed suit. Denar, LLC, Sun Holdings, LLC, Pera les, and EYM Diner of DFW, LLC are not parties to this appeal.3 King received on October 11 , 2010

. In response, King argued that the Agreement never became effective pursuant to th e following provision s in the Agreement : 1. Effective Date The effective date of this Mutual Agreement to Arbitrate Claims (“Agreement”) is stated below. If Employee receives a copy of this Agreement prior to commencing work at Company, Employee ’ s commen cement of work at Company shall constitute acceptance of the terms and conditions of this Agreement regardless of whether or not Employee signs this document and shall be the Effective Date of this Agreement. For any other Employee, the Effective Date of this Agreement shall occur ten (10) calendar days after Employee receives notice of the terms and conditions of this Agreement and Employee continues to work for Company which shall indicate conclusively that he or she accepts the terms and conditions of t his Agreement. For E mployees who commence or continue employment at Company as of their respective Effective Date, Company and Employee mutually agree to resolve Covered Claims which occur on or after the Effect ive Date according to the terms and conditio ns of the Agreement. King further argued that the Agreement was unenforceable because it was not signed by either Denar Res taurants or King, it lacked consideration, and it was procedurally and substantively unconscionable. In addition, King claimed that Denar Restaurants waived its right to arbitratio n by judicial conduct , that sexual assault claims were outside the scope of the Agreement , and that the Agreement was induced or procured by fraud

. After an evidentiary hearing, the trial court denied Denar Restaurants ’ s motion, stating in its order “that the parties are not bound by an arbitration4 agreement and that the current dispute or controversy between the parties is not within the scope of an enfo rceable arbitration agreement.” Denar Restaurants and King each submitted proposed findings of fact and conclusions of law, but the trial court did not file any find ings or conclusions. This appeal followed

. II. Discussion In its sole issue, Denar Restaurants argues that the trial court abused its discreti on by denying its motion to compel arbitration. Denar Restaurants complains that the arbitrator, not the trial court, should determine whether the Agreement became effective by its terms. Alternatively, Denar Restaurants contends that even if the trial c ourt had the authority to determine the existence of the Agreement, the trial court abused its discretion because Denar Restaurants established that the Agreement was a valid agreement to arbitrate and that King ’ s claims are within the scope of the Agreeme nt, 4 shifting the burden to King to establish an affirmative defense to the Agreement, which it argues she failed to do. 5

4 In her fifth amended petition, King asserts claims of assault and battery, false imprisonment, negligence, discrimination and sexual harassment, vicarious liability/respondeat superior, breach of contract, intentional infliction of emotional distress, piercing the corporate veil/alter ego, and fraudulent transfer and conspiracy. Denar Restaurants admits that King’s fraudulent transfer/conspiracy claims are not within the Agreement’s scope

.
5 I n its r eply brief, Denar Restaurants argues that the trial court abused its discretion by excluding evidence of King’s prior convictions. See Tex. R. E vid. 609. Denar Restaurants did not raise or argue this issue in its opening brief, and it is not respo nsive to the argume nts contained in King’s brief. See Tex. R. App. P. 38.3 (stating that appellant may file a reply brief addressing any matter in5 A. Standard of Review We review the trial court’ s denial of a motion to compel arbitration for an abuse of discretion. See In re Lab att Food Serv ., L.P. , 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding); Cleveland Constr., Inc. v. Levco Constr., Inc. , 359 S.W.3d 843, 851

– 52 (Tex. App.

— Hous ton [1st Dist.] 2012, pet. dism’d) (explaining standards of r eview for arbitration appeals). A trial court abuses its discretion when it refuses to compel arbitration pursuant to a valid and enforceable arbitration agreement. In re Halliburton Co. , 80 S.W.3d 566, 573 (Tex. 2002) (orig. proceeding), cert. denied , 537 U.S . 1112 (2003)

. Under this sta nda rd, we review the trial court’s legal determinations de

novo and defer to the trial court’ s factual determinations if they are supported by the evidence

. Cleveland Constr. Inc. , 359 S.W.3d at 851

– 52. In reviewing the trial court’ s factual determinatio ns, we must credit favorable evidence if a reasonable fact f inder could and disregard contrary evidence unless a

re asonable fact finder could not. Kroger Tex. Ltd. P ’ ship v. Suberu , 216 S.W.3d 788, 793 (Tex. 2006). We are required to consider only the ev idence and inferences tending to support the finding under attack and to disregard all evidence and inferences to the contrary. In re Trammell , 246 S.W.3d 815, 820

appellee’s brief); Marin Real Estate Partners, L.P. v. Vogt , 373 S.W.3d 57, 72 (Tex. App.

— San Antonio 2011, no pet.) (declining to consider issues raised in reply brief that were not raised in appellant’s original brief or raised in response to appellee’s brief ) ; Lopez v. Montemayor , 131 S.W.3d 54, 61 (Tex. App.

— San Antonio 2003 , pet. denied) (“A reply brief is not intended to allow an appellant to raise new issues.”). Therefore, we do not consider this issue.6 (Tex. App.

— Dallas 2008, orig. proceeding)

. Because no findings of fact or conclusions of l aw were filed, we must uphold the trial court ’ s decision if there is sufficient evidence to support it on any legal theory asserted. Shamro ck Foods Co. v. Munn & Assoc s

. , Ltd. , 392 S.W.3d 839, 844 (Tex. App.

— Texarkana 2013, no pet.) ; Wetzel v. Sullivan, K ing & Sabom, P.C. , 745 S.W.2d 78, 81 (Tex. App.

— Houston [1st Dist.] 1988, no writ). B. Applicable Law The Agreement provides that the Federal Arbitration Act (FAA) governs all aspects of this Agreement. See In re AdvancePCS Health L.P. , 172 S.W.3d
605

– 06 & n.3 (Tex. 2005) (orig. proceeding) ( stating that FAA governs arbitration in Texas if parties expressly contracted for FAA ’ s application). The FAA provides, in relevant part: A written provision in

. . . a contract evidencing a transaction involving com merce to settle by arbitration a controversy thereafter a rising out of such contract .

. . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. 9 U.S.C.A. § 2 (West 2009)

. T his provision has been described as reflecting both a “liberal federal policy favoring arbitration” and the “fundamental principle that arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion , 13 1 S. Ct. 1740, 1745 (2011) (citing Rent

- A

- Cent er, W., Inc. v. Jackson , 561 U.S. 63, 67, 130 S. Ct. 2772, 2776 (2010) ; Moses H. Cone Mem’ l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24, 103 S. Ct. 927, 941 (1983)). “The FAA thereby places arbitration agreements on an equal footing with other contract s,

. . . and7 requires courts to enforce them according to their terms.” Rent

- A

- Center , 561 U.S. at 67, 130 S. Ct. at 2776 (citing Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440, 443, 126 S. Ct. 1204, 1206 (2006) ; Volt Info. Scis., Inc. v. Bd. of
Tr s. of Leland Stanford Junior Univ. , 489 U.S. 468, 478, 109 S. Ct. 1248, 1255 (1989)).

“ Under the FAA, ordinary principles of state contract law determine whether there is a valid agreement to arbitrate.” In re Kellogg Brown & Root, Inc. , 166 S.W.3d 732, 7 38 (Tex. 2005) (orig. proceeding) . “ Because arbitration is contractual in nature, the FAA generally ‘ does not require parties to arbitrate when they have not agreed to do so. ’” Id. (quoting Volt Info. Scis., Inc. , 489 U.S.
at 478, 109 S. Ct. at 1255 ( “Ar bitration under the [FAA] is a ma tter of consent, not coercion .

. . .” ) ) . A party seeking to compel arbitration has the initial burden to establish (1) the existence of a valid, enforceable arbitration agreement and (2) that the claims at issue fall wit hin the arbitration agreement ’ s scope. In re Dillard Dep ’ t Stores, Inc. , 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding); Grand Homes 96, L.P. v. Loudermilk , 208 S.W.3d 696, 701 (Tex. App.

— Fort Worth 2006, pet. denied). If the party seeking arbitratio n carries its initial burden, the burden shifts to the opposite party to present evidence of an affirmative defense. AdvancePCS Health L.P. , 172 S.W.3d at 607. While a strong presumption favoring arbitration exists, the presumption arises only after the p arty seeking to compel arbitration proves that a valid arbitration agreement exists. J.M. Davidson, Inc. v. Webster , 128 S.W.3d 223,8 227 (Tex. 2003) . In deciding whether a party has met its initial burden, we do no t resolve doubts or indulge a presumptio n in favor of arbitration. Id. Rather, “ the presumption arises only after the party seeking to compel arbitration proves that a vali d arbitration agreement exists.” Id. C. Application The dispositive issue in this case is whether the alleged Agreement between Denar Restaurants and King became effective by its terms. T he existence of a valid arbitration agreement “is therefore a gateway matter for the court to decide.” In re Rubiola , 334 S.W.3d 220, 224 (Tex. 2011) (orig. proceeding) (citing In re Week ley Homes, L.P. , 180 S.W.3d 127, 130 (Tex. 2005) (orig. proceeding) ) ; see , e.g. , Granite Rock Co. v. Int ’ l Bhd. of Teamsters , 130 S. Ct. 2847, 2855

– 56 (2010) ( “ It is .

. . well settled that where the dispute at issue concerns contract formation, the disput e is generally for courts to decide.”); DK Joint Venture 1 v. Weyand , 649 F.3d 310, 317 (5th Cir. 2011) (“[It] is for the courts and not the arbitrator to decide in the first instance[ ] a dispute over whether the parties entered into any arbitration agree ment in the first place.”);
Will

– Drill Res., Inc. v. Samson Res. Co. , 352 F.3d 211, 212 (5th Cir. 2003) (“We vacate the order compelling arbitration and remand the case to the district court, concluding that where the very existence of any agreement to arb itrate is at issue, it is for the courts to decide based on state

- law contract formation principles.”)

.9 Whether an enforceable agreement to arbitrate exists between Denar Restaurants and King is a legal question we review de novo. See In re Jindal Saw Ltd

. , 264 S.W.3d 755, 761 (Tex. App.

— Houston [1st Dist.] 2008, orig. proceeding ) . As the party urging arbitration, Denar Restaurants must show that the Agreement meets all requisite contract elements for a valid and binding
contract. See IHS Acquisition No. 131, Inc. v. Iturralde , 387 S.W.3d 785, 791 (Tex. App.

— El Paso 2012 , no pet. ) (citing Davidson , 128 S.W.3d at 228)

. Formation of a binding contract requires: “(1) an offer; (2) acceptance in strict compliance w ith the terms of the offer; (3) a meeting of the minds; (4) each party ’ s consent to t he term; and (5) execution and delivery of the contract with the intent that it be mutual and binding.” Id. (citing Cessna Aircraft Co. v. Aircraft Network, L.L.C. , 213 S.W.3d 455, 465 (Tex. App.

— Dallas 2006, pet. denied)). Section 1 of the Agreement provides that it becomes effective upon the occurrence of one of two events. First, “[i] f Employee receives a copy of this Agreement prior to commencing work at Company, Employee ’ s commencement of work at Company shal l constitute acceptance of the terms and conditions of this Agreement regardless of whether or not Employee signs this document and shall be the Effective Date of this Agreement. ” Second, “[f] or any other Employee, the Effective Date of this Agreement sha ll occur ten (10) calendar days after Employee receives notice of the terms and conditions of this Agreement and Employee continues to work for Company which shall indicate conclusively that he or she accepts the terms and conditions of this Agreement. ”10 S ection 1 further provides, “For Employees who commence or continue employment at Company as of their respective Effective Date, Compa ny and Employee mutually agree to resolve Covered Claims which occur on or after the Effective Date according to the terms and conditions of this Agreement. ” The Agreement also states that it “commences on the Effective Date and applies to all Covered Claims which occurred on or af ter the Effective Date.” At the hearing on the motion to compel, King testified that her firs t day of work at the restaurant was October 11, 2010. Judy Lynn, the manager on duty that day, gave King some papers and asked her to sign them before she started her training. Denar Restaurants claims Lynn gave King a new hire packet, which included var ious employment forms, including the Agreement, and a document entitled “Receipt of Employment Documents.” The “Receipt of Employment Documents” is a list of documents Denar Restaurants claims were included in King ’ s new hire packet. At the top of the “Re ceipt of Employment Documents,” there is an acknowledgement that states , “I

. . . agree that I have received and reviewed the following documents.” This acknowledgment is followed by the instruction, “Please initial after each do cument described below.” Several employment

- related documents are then listed

— including the Agreement

— each with a blank to the right for the recipient ’ s initials. At the bottom of the “Receipt of Employment Documents,” there is a space for the employee ’ s signature and the date.11 K ing claimed that she never received a copy of the Agreement and that neither Lynn nor anyone else associated with the restaurant told her about the Agreement. King testified that she saw the Agreement for the first time on January 25, 2013, the second day of the hearing on the motion to compel. Denar Restaurants offered a “Receipt of Employment Documents” allegedly bearing King ’ s initials in the blanks next to each document listed and her signature at the bottom as proof of King ’ s recei pt of the Agreement

. King admitted that she signe d the “Receipt o f Employment Documents,” but she denied that the initials in the blanks were hers

. Susan Abbey, a handwriting expert hired by Denar Restaurants, testified that she compared King ’ s signature on the “Receipt of Employment Documents” with several known exemplars of King ’ s signature and concluded that the signature at the bottom of the “Receipt of Employment Documents” was made by the same person wh o made the exemplars. Abbey further testified that the initials i n the blank beside the Agreement in the list of documents in the “Receipt of Employment Documents” were made by the same person who made the initials in the blanks beside the other docu ments in the list. Abbey further opined that the initials in the blank beside the Agreement in the list of documents were written in the same ink as King ’ s signature and were consistent with King ’ s printing in her em ployment application. King testified that her last day of w ork was October 19, 2010. King alleged in her ple ading s that she was constructively discharged on October 20, 2010. At12 the hearing, King explained that she believed that October 20, 2010, was the date that either she or her attorney notified Denar Restaurants that she would no t be returning to work. Den ar Restaurants argues that the phrase “commencing work” in section 1 of the Agreement should not be construed to “encompass a day of nothing more than training, orientation, and form completion in anticipation of beginning the job.” Denar Restaurants cont ends that a more “plain meaning” reading of the phrase “commencing work” is one that interprets “work” as the employee ’ s actual performance of the job for which the employee was hired, which, in King ’ s case, was waitressing

. We disagree. The word “work,” which is undefined in the Agreement, has a well

- accepted common meaning: “physical or mental exertion to attain an end, [especially] as controlled by and for the benefit of an employer; labor.” Black’s Law Dictionary 1742 (9th ed. 20 09). Denar Restaura nts required all new employees to go through orientation and training, during wh ich time new employees completed the documents in the ne w hire packet. And Denar Restaurants admitted that King was paid for October 11, 2010, including the time she spent com pleting the new hire p acket and in training. Therefore, we conclude that King commenced work on October 11, 2010 , when she began the orientation and training process at the restaurant

. There was conflicting testimony as to whet her King received either the Agreement or notice of its terms and conditions

. If she did not receive the Agreement or notice of its terms and conditions , then it did not became effective13 under either prong of section 1. If King did receive the Agreement, the earliest she could have done so was after she commenced work on October 11 , 2010 , and therefore, the Agreement did not become effective by her commencement of work under the first prong . Thus, we look to the second prong to determine the Effective Date of the Agreement. King t estified that her last day of work was October 19 , 2010, and that she was constructively discharged on October 20 , 2010 . Denar Restaurants offered no contradictory evidence regarding the dates King worked. Therefore, even if King received notice of the t erms and conditions of the A greement after she commenced work , it never became effective by its
terms because King did not continue to work for Denar Restaurants for ten days after receiving such notice

. Accordingly , w e hold that an agreement to arbitrate did not exist betw een Denar Restaurants and King. Denar Restaurants also complains that an arbitrator, rather than the trial court, should determine whether and when the Agreement became effective because the following provisions in the Agreement reserved all issue s of arbitrability for the arbitrator : 5. Scope of Arbitration Agreement

. . . .
c . Other Scope of Arbitration Provisions

. . . . The question of whether any particular claim is a Covered Claim under the terms of this Agreement shall be arbitrated pursuant to the procedures set for th in this Agreement.14 6. Procedure

a. Who Shall Arbitrate? All arbitrations under this Agreem ent shall be administered by Judicial Workplace Arbitration, Inc. under its rules for the resolution of disputes, an d if not available, then the American Arbitration Association (“AAA”) and its rules. 6 We recognize that an arbitration agreement may give the arbitrator the power to resolve gateway issues. See , e.g. , Rent

- A

- Center 561 U.S. at 68

– 69, 130 S. Ct. at 2777 ( recognizing parties can agree to arbitrate questions of arbitrability); First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 943, 115 S. Ct. 1920, 1923 (1995) (holding question of primary power to decide arbitrability “turns upon what the parties agreed about that matter”); AT&T Techs., Inc. v. Commc ’ ns Workers of Am. , 475 U.S. 643, 649, 106 S. Ct. 1415, 1418 (1986) (holding parties may agree to arbitrate arbitrability). But because we have determined that the Agreement never came into existence by its terms, we conclude that the parties did not agree to submit any issues to the arbitrator.

6 Neither the Judicial Workplace Arbitration rules nor the AAA rules are in the record before us. In its reply brief, Denar Restaurants points us to Rule 6a of the AAA Employment Arbitration Rules and Mediation Procedures, which provides as follows: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objection s with respect to the existence, scope or validity of the a rbitration agreement.” American Arbitration Association, Employment Arbitration Rules and Mediation Procedures, Rule 6a (amended and effective Nov. 1, 2009), available at http://adr.org/ aaa/faces/rules

.15 Because we have concluded that the Agreement never came into existence , which is dispositive of this appeal, we need not address the remainder of Denar Resta u r ants’s arguments

. See Tex. R. App. P. 47.1. Accordingly, we overrule Denar Restaurants’s sole issue.
III. Conclusion Having overruled Denar Restaurant s’ s sole issue, we affirm the trial court ’ s order denying Denar Restaurant s ’ s motion to compel arbitration.

/s/ Anne Gardner ANNE GARDNER JUSTICE PANEL: LIVINGSTON, C.J.; GARDNER and GABRIEL, JJ.
DELIVERED: May 30, 2014